Silver came under renewed selling pressure yesterday as oil prices climbed
to fresh weekly highs. Meanwhile, the Middle East situation remains largely
unchanged, with Houthi attacks on Saudi Arabia continuing and US-Iran
negotiations still at an impasse.
This backdrop is likely to keep a lid on silver’s upside unless the Fed
adopts a more dovish stance, leading to a decline in real yields and US dollar.
Looking ahead, US-Iran negotiations will remain in focus, but tomorrow’s US
CPI report could also be a major catalyst in case the data deviates from
expectations.
A higher than expected core CPI could increase the chances of a Fed rate
hike in October, putting further pressure on silver prices. Conversely, a soft
report could provide some short-term support for the precious metal, although
it wouldn’t change the bigger picture just yet.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silver has been consolidating around the lows. We
have a downward trendline that could act as resistance. If the price pulls back
into the trendline, we can expect the sellers to lean on it, with a defined
risk above it, to position for a drop into the 55.0 level. The buyers, on the other
hand, will want to see the price breaking higher to increase the bullish bets
into the 71.55 level next.
SILVER TECHNICAL ANALYSIS –
4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price recently broke above the minor downward trendline that was
defining the bearish momentum on this timeframe. This is a sign of a loss of
momentum and could precede a bigger pullback. We have a strong resistance zone around
the 62.00 level. If the price gets there, we can expect the sellers to step in,
with a defined risk above the resistance, to position for a drop into the 55.00
level. The buyers, on the other hand, will want to see the price breaking
higher to increase the bullish bets into the major downward trendline.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, if the
price rallies into the resistance and make a new higher high, we could have a
minor upward trendline defined by the dotted line. If the price then rejects
the resistance and pulls back into the upward trendline, we can expect the
buyers to lean on it, with a defined risk below it, to keep pushing into new
highs. The sellers, on the other hand, will look for a break to increase the
bearish bets into the 55.00 level next. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we have the US CPI report. On Thursday, we get the US PPI, the US
Retail Sales and the latest US Jobless Claims figures.
This article was written by Giuseppe Dellamotta at investinglive.com.